U.S. mortgage rates fell in the past week to the latest in a series of record lows amid concerns about the state of the U.S. economy, according to a survey released Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.
Rock-bottom rates should continue to spur demand for home loan refinancing, putting extra cash into consumers' hands that they can save, use to pay off existing debt or
funnel into the economy through extra spending. (Also read: More Homeowners Expect Home Values to Fall More)
Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.42 percent for the week ended Aug. 19, down from the previous week's 4.44 percent and its year-ago level of 5.12 percent, according to the survey.
Thirty-year mortgage rates have fallen to fresh lows for nine straight weeks. Freddie Mac started the survey in April 1971.
Mortgage rates are linked to yields on Treasuries and yields on mortgage-backed securities.
Monday, August 23, 2010
Friday, June 18, 2010
Senate Backs Extending Deadline for Housing Tax Credit
The Senate voted Wednesday to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.
The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.
The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers.
Existing homeowners buying a new primary residence are eligible for a $6,500 credit.
Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.
The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.
The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break.
The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.
The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers.
Existing homeowners buying a new primary residence are eligible for a $6,500 credit.
Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.
The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.
The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break.
Thursday, June 17, 2010
HOUSING RECESSION NOT OVER
In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com's chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.
The four myths:
1.The housing recession is over. It's not, Humphries said. He estimates the bottom in home prices won't come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.
2.After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. "Once we hit bottom, the bottom is going to be a long and flat affair across the markets," he said. "What we're going to see once we hit bottom is the second phase of the housing recession... that second phase is one of being flat."
3.The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn't envision foreclosure activity stabilizing until late 2011.
4.The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. "The biggest impact [in home sales] we believe were low prices... low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration."
The four myths:
1.The housing recession is over. It's not, Humphries said. He estimates the bottom in home prices won't come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.
2.After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. "Once we hit bottom, the bottom is going to be a long and flat affair across the markets," he said. "What we're going to see once we hit bottom is the second phase of the housing recession... that second phase is one of being flat."
3.The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn't envision foreclosure activity stabilizing until late 2011.
4.The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. "The biggest impact [in home sales] we believe were low prices... low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration."
Wednesday, June 16, 2010
Mortgage rates drop
Bond yields fell and mortgage rates followed after a relatively weak employment report, allowing the 30-year fixed-rate mortgage to hover near its record low set late last year, Freddie Mac's chief economist said on Thursday.
The 30-year fixed-rate mortgage averaged 4.72% for the week ending June 10, down from 4.79% last week and 5.59% a year ago, according to Freddie Mac's weekly survey of conforming mortgage rates.
The 15-year fixed-rate mortgage set a record low for the fourth week in a row, averaging 4.17% this week, down from 4.20% last week and 5.06% a year ago. Freddie Mac started tracking the mortgage in August 1991.
The 30-year fixed-rate mortgage averaged 4.72% for the week ending June 10, down from 4.79% last week and 5.59% a year ago, according to Freddie Mac's weekly survey of conforming mortgage rates.
The 15-year fixed-rate mortgage set a record low for the fourth week in a row, averaging 4.17% this week, down from 4.20% last week and 5.06% a year ago. Freddie Mac started tracking the mortgage in August 1991.
Thursday, May 6, 2010
Bad economic news and natural disasters can be good news for mortgage rates.
When the Federal Reserve stopped buying mortgage backed securities, the assumption was that rates would start to rise.
But without a crystal ball, no-one could predict the erruption of a volcano in Iceland or the drastic measures taken by the European Union to bail out the Greek economy.
These events caused uncertainty in investors, who moved away from the stock market to more stable mortgage backed securities.
As a result, rates have stayed steady, but this is probably a temporary state.
If you are still considering refinancing, or are actively searching for a home, don't wait too long.
Call me today! We have rates with APRs beginning in the 3's, 4's and 5's - even JUMBOs!
But without a crystal ball, no-one could predict the erruption of a volcano in Iceland or the drastic measures taken by the European Union to bail out the Greek economy.
These events caused uncertainty in investors, who moved away from the stock market to more stable mortgage backed securities.
As a result, rates have stayed steady, but this is probably a temporary state.
If you are still considering refinancing, or are actively searching for a home, don't wait too long.
Call me today! We have rates with APRs beginning in the 3's, 4's and 5's - even JUMBOs!
Wednesday, April 14, 2010
APRIL 14TH MORTGAGE UPDATE
Mortgage markets improved last week to the delight of chicago rate shoppers.
Against a sparse economic calendar, Wall Street turned its attention to geopolitics in Greece and the Eurozone. It didn’t like what it saw. Safe haven buying buoyed mortgage bond markets last week as pricing recaptured two-thirds of its monumental losses from the week prior.
Despite last week’s surge, however, conforming and FHA mortgage rates remain near their worst levels of the year and appear poised to increase throughout the summer months.
The U.S. economy is improving. From last week:
Pending Home Sales posted a strong monthly improvement
Wholesale Trade data pointed to higher consumer spending ahead
Inflationary threats on the economy are receding, according to the Fed
Furthermore, continuing jobless claims were down again.
Good news for the economy is generally bad news for mortgage rates. Last week, that wasn’t the case because of Wall Street’s want for “safe” assets right now. This includes mortgage bonds and is helping to keep consumer rates low. When the safe haven buying eases, rates should climb.
Meanwhile, this week, the calendar is back-heavy.
There’s no real data until Wednesday’s Consumer Price Index, and then there’s a flurry of new releases through Friday’s market close including Retail Sales, Consumer Confidence and Housing Starts.
Strength in these issues should push mortgage rates back up.
If you’re floating or shopping a loan right now, be wary of market volatility. Rates have been jumpy since April 1 and mortgage rates are changing quickly. This week, locking in before Wednesday may be your safest, near-term rate locking strategy.
Against a sparse economic calendar, Wall Street turned its attention to geopolitics in Greece and the Eurozone. It didn’t like what it saw. Safe haven buying buoyed mortgage bond markets last week as pricing recaptured two-thirds of its monumental losses from the week prior.
Despite last week’s surge, however, conforming and FHA mortgage rates remain near their worst levels of the year and appear poised to increase throughout the summer months.
The U.S. economy is improving. From last week:
Pending Home Sales posted a strong monthly improvement
Wholesale Trade data pointed to higher consumer spending ahead
Inflationary threats on the economy are receding, according to the Fed
Furthermore, continuing jobless claims were down again.
Good news for the economy is generally bad news for mortgage rates. Last week, that wasn’t the case because of Wall Street’s want for “safe” assets right now. This includes mortgage bonds and is helping to keep consumer rates low. When the safe haven buying eases, rates should climb.
Meanwhile, this week, the calendar is back-heavy.
There’s no real data until Wednesday’s Consumer Price Index, and then there’s a flurry of new releases through Friday’s market close including Retail Sales, Consumer Confidence and Housing Starts.
Strength in these issues should push mortgage rates back up.
If you’re floating or shopping a loan right now, be wary of market volatility. Rates have been jumpy since April 1 and mortgage rates are changing quickly. This week, locking in before Wednesday may be your safest, near-term rate locking strategy.
Tuesday, April 13, 2010
MORTGAGE RATES HOLD STRONG
Mortgage rates spent all last week attempting to recover from a few weeks of bad news in the bond market. We went home on Friday afternoon in good spirits as rates were seen at their best levels since the week before the Fed exited the mortgage backed securities market.
The week ahead is very busy with many economic reports, Federal Reserve speakers, and the kick-off of earnings season. Typically during corporate earnings season, strong reports lead to a stock market rallies which unfortunately come at the expense of bonds. The opposite generally occurs when earnings are worse than expected. Earnings season kicks off today after the closing bell with Alcoa reporting. Beyond that mortgage rates will battle a full economic data calendar which is anticipated to show continued improvement in the manufacturing sector, a more content consumer, tame inflation, and more weak housing starts and building permits numbers.
Here are a few highlights for the week:
Monday
Open of earnings season. Alcoa reports after the bell
Tuesday
International Trade (low to medium impact) The Trade Balance report measures the monthly difference between what our nation imports and what our nation exports.
Import and Export Prices (low to medium impact)
Wednesday
Weekly Mortgage Applications Index (low impact)
JP Morgan Earnings
Consumer Price Index, measures inflation on the consumer level (medium to high impact)
Retail Sales (medium to high impact) If sales figures are strong, that is a sign of economic expansion which will pressure mortgage rates higher. As a general rule, positive economic news is bad for mortgage rates while bad economic news is good for mortgage rates.
Beige Book, This data outlines economic conditions around the United States and is used as a point of reference during FOMC meetings where our nation’s monetary policy is set. (medium impact)
Ben Bernanke speaks on the Economic Outlook (medium to high impact)
Thursday
Weekly Jobless claims (medium impact)
Empire State Manufacturing Survey (medium impact)
Industrial Production, which is a measure of the strength of the manufacturing sector by measuring the output at U.S. factories, utilities and mines. Higher industrial production would be a positive economic indicator which would benefit the stock market at the expense of the fixed income sector. (high impact)
Philadelphia Fed Survey (low impact)
Friday
Housing Starts which estimates how much new residential real estate construction occurred in the previous month. (medium to high impact)
Bank of America Earnings
Consumer Sentiment (medium impact)
READ MORE for a more detailed look at the Week Ahead
When the day began, lender rate sheets were very similar where they were set on Friday, however both benchmark Treasury yields and mortgage-backed security prices have rallied throughout the session. This has allowed several lenders to reprice for the better. The par 30 year conventional rate mortgage is still holding in the 5.0% to 5.25% range for well qualified consumers though. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs. For consumers with lower FICO scores and higher loan to values, you should consider a government FHA loan. FHA loans have similar rates to conventional loans but do come with higher costs.
The week ahead is very busy with many economic reports, Federal Reserve speakers, and the kick-off of earnings season. Typically during corporate earnings season, strong reports lead to a stock market rallies which unfortunately come at the expense of bonds. The opposite generally occurs when earnings are worse than expected. Earnings season kicks off today after the closing bell with Alcoa reporting. Beyond that mortgage rates will battle a full economic data calendar which is anticipated to show continued improvement in the manufacturing sector, a more content consumer, tame inflation, and more weak housing starts and building permits numbers.
Here are a few highlights for the week:
Monday
Open of earnings season. Alcoa reports after the bell
Tuesday
International Trade (low to medium impact) The Trade Balance report measures the monthly difference between what our nation imports and what our nation exports.
Import and Export Prices (low to medium impact)
Wednesday
Weekly Mortgage Applications Index (low impact)
JP Morgan Earnings
Consumer Price Index, measures inflation on the consumer level (medium to high impact)
Retail Sales (medium to high impact) If sales figures are strong, that is a sign of economic expansion which will pressure mortgage rates higher. As a general rule, positive economic news is bad for mortgage rates while bad economic news is good for mortgage rates.
Beige Book, This data outlines economic conditions around the United States and is used as a point of reference during FOMC meetings where our nation’s monetary policy is set. (medium impact)
Ben Bernanke speaks on the Economic Outlook (medium to high impact)
Thursday
Weekly Jobless claims (medium impact)
Empire State Manufacturing Survey (medium impact)
Industrial Production, which is a measure of the strength of the manufacturing sector by measuring the output at U.S. factories, utilities and mines. Higher industrial production would be a positive economic indicator which would benefit the stock market at the expense of the fixed income sector. (high impact)
Philadelphia Fed Survey (low impact)
Friday
Housing Starts which estimates how much new residential real estate construction occurred in the previous month. (medium to high impact)
Bank of America Earnings
Consumer Sentiment (medium impact)
READ MORE for a more detailed look at the Week Ahead
When the day began, lender rate sheets were very similar where they were set on Friday, however both benchmark Treasury yields and mortgage-backed security prices have rallied throughout the session. This has allowed several lenders to reprice for the better. The par 30 year conventional rate mortgage is still holding in the 5.0% to 5.25% range for well qualified consumers though. To secure a par interest rate on a conventional mortgage you must have a FICO credit score of 740 or higher, a loan to value at 80% or less and pay all closing costs. For consumers with lower FICO scores and higher loan to values, you should consider a government FHA loan. FHA loans have similar rates to conventional loans but do come with higher costs.
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